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WARNING: Women Empowering Women "Gifting" Scheme - It Could Seriously Damage Your Pocket!The Government wants to warn people about a "gifting" scheme operating widely in the UK under the name "Women Empowering Women". Far from empowering women, it could leave them seriously out of pocket.
Patricia Hewitt MP, Secretary of State for Trade and Industry and Minister for Women warns:
How it WorksThe scheme works like a chain letter and only women can take part. It is based on individual contributions or "gifts" of £3,000 given to a member of a network (usually a family member or friend). In return, each participant may expect to receive multiples of that amount up to £24,000 as they progress though the network hierarchy. However, this is dependent on new participants continually joining the scheme.The danger is that these types of networks break down as the pool of new investors eventually dries up. Participants joining the scheme late stand a good chance of losing their original contribution never mind any return. Women Empowering Women does not appear to contravene current UK legislation on pyramid schemes or multi level marketing because it does not involve any trading of products or services nor any form of company structure or control. However, all schemes where money changes hands may be subject to the general criminal law on fraud, theft, and deceit. Anyone with evidence that a criminal offence may have been committed should report the matter to the police immediately. Legally, these schemes are difficult to crack but the Government is currently looking at how they are dealt with internationally, particularly in the USA where they are more common. We are examining all the avenues for protecting the public from this type of scheme. The MechanicsThe risks are clear. For example: If eight people invest £3,000 each and then progress through the levels of the network, they will each expect to receive £24,000 when they reach the final level.If each of those eight people are to receive that sum however, it will be necessary for 64 people to have each invested £3000. Each of those 64 investors will be expecting to collect their £24,000, but that would mean that 512 people would now have to invest. The next level would require 4096 participants then 32,768 then 262,144. In simple terms each participant needs another 8 investors in the scheme to get their money back and make a return. The supply of potential investors will dry up, leaving the majority of people in the scheme having paid out a large sum and receiving nothing in return.
Trading Standards Division, 3rd Floor, Wallasey Town Hall, Brighton Street, Wallasey, Wirral CH44 8ED
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